Last night I was hanging out with my best friends at the 3rd Street Promenade in Santa Monica. They’re in town from NY and FL so that we can go see Outkast on Saturday. I’m pumped!

One of the coolest parts about that area is getting to watch all the crazy street performers. From grandmas in gypsy skirts doing things you’d rather forget, to salsa dancers, country singers and magicians, there’s generally a lot of cool stuff going on down there.

But not all performers are created equal. As I was walking through the plaza, I paid careful attention to various tip jars.

While many of them were bone dry, save a few nickels…others were OVERFLOWING with cash.

In fact, one performer was so compelling that I actually stopped what I was doing, walked SEVERAL BLOCKS to find an ATM, then walked all the way back to give him a $20 tip.

Why? What was so special about this performer?

Here’s a hint: He wasn’t more talented than the others out there.

But he was doing several things that made me want to give him money more than any other performer.

What I learned could help you stand out in the crowd with your business — whether it’s a product or a service.

Curious to know what it was?

Keep reading…

“Dayum! Take my money!” (The Tip Jar Effect)

The old adage is true: There really is nothing new under the sun.

If you have a product or service you’re selling, there’s a 99.99% chance somebody has done already exactly what you’re doing — or has at least offered some variation.

The key then, is not to invent something new, but to stand out in a way that makes the prospect or consumer compelled to buy.

How can you create that effect in someone’s brain? Check out this video, then I’ll break down for you exactly how this performer is getting inside his customers’ brains.

Step 1: Give your audience something that they can immediately relate to

The first thing you’ll notice is the song he’s playing.

In this case, it’s Latch by Disclosure. This song is a few years old, but it’s been getting a revivial in the last few months through different remixes and TV shows that are popular among the younger market — especially the 19-34 market.

Apple, True Religion Jeans, Pinkberry and other popular retailers that specifically intended to serve the younger generation line the street from end to end.

This is the same demographic that would recognize and like the song.

By choosing a song that the crowd is likely to know, he’s guaranteed to get more attention and more tips.

And clearly, it’s working — in just the minute or so that I filmed, you can hear people screaming/cheering, and you’ll even see multiple people tip. Again, this was just in the period of a minute or so.

On the other hand, here’s an example of a country granddad that the crowd clearly couldn’t relate to. Some drunk dude actually walks up and tries to TAKE THE MIC from him. The granddad yells “FUCK YOU” at the end.

Hmm…

Counterintuitive observation: The connection between the listener and the song is what results in the tip. When you hear a song that you like, you begin to feel happy and start thinking about all the good things associated with hearing that song. Your urge to tip the perfomer is a direct result of the positive associations that are already wired your brain and connected to the song. In effect, you’re tipping the song, not the performer.

(This feeling is commonly expressed as, “Hell yeah, that’s my JAM!”)

Using this in your business: Use something that your audience already knows to create a positive association with what you’re already doing and make them feel instantly comfortable with you.

Step 2: Create social proof

I mentioned that this performer had wads and wads of money in his tip jar while other performers had nothing.

But here’s the thing — I didn’t see every single dollar go into the jar. I just saw the end result (a full jar).

When I saw that he already had so many tips, I immediately thought, “Damn, he must be pretty good.”

This of course led me to a more subconsious conclusion — If others saw enough value in him to contribute, I should too.

We do this all the time in our every day lives.

Imagine you’re scrolling though your Facebook newsfeed and see a meme with a few thousand likes — especially one that several of your friends have also liked.

You are MUCH more likely to contribute a “Like” as well.

Others have already validated that the meme is funny and by liking it, you’re agreeing with them, which now means you’re in on the joke. You have now validated yourself as part of their social circle by agreeing with them.

The same effect is happening with the tip jar. The more money that goes into the jar (especially when you actually SEE others go up and stuff money in), the more pressure there is to contribute. Each dollar in the jar was a testimonial to why I should also contribute. It was this feeling that led me to look in my wallet, find no cash and decide to hunt down an ATM.

Conversely, when you look at the other performers with completely empty tip jars, their values in your mind decrease significantly. You might think, “This clearly guy sucks. Look, he’s not making any money.”

Is this fair? No.

Just because someone doesn’t have money in their tip jar, does that mean they suck? No.

But social proof is a very strong psychological cue.

Counterintuitive observation: You don’t have to earn all the proof up front for it to still work. Many people who play live music will “seed” the tip jar with money before they start playing to make it appear that they’ve already received tips. This greatly increases the odds that others will contribute as well.

Using this in your business: One great way to show social proof is to get testimonials praising your work. The more specific, the better. Get a smiling picture and a beaming quote. It will make prospects feel more more comfortable buying if they know people before them have enjoyed your offering.

Step 3: Test, test, test

Most people never think about this, but it’s an important part of idea validation.

You need to TEST your idea to see which approach generates the best results.

In the case of this performer, there are several elements at play that he most likely tested, and possibly optimized to find the best result:

1.) Day and time

It was a warm summer evening — Thursday, about 8pm. The weekend is beginning soon, more people are going out to dinner. Everyone’s in a feel-good mood. Good timing.

2.) Location

He was in the perfect spot — right by the intersection of the indoor mall area and the restaurants. That’s where all the action was. Every other performer was in the more “dead” area of the strip where retail shops were beginning to close up. Everybody was walking right past them in order to make their way to the restaurant area where our hero was racking up the moolah.

3.) Song selection

He didn’t just pick random songs. In fact, he only played about 5-7, and when he got to the end, he just started playing them again. Why? Because he knew what people wanted to hear. I can’t remember everything he played, but they were all hits from Rhianna, to Pharrell, to Robin Thicke.

Every song he played made you go, “Awww yeah!!”

That’s not an accident.

Using this in your business: Test everything.

The words you use.

The location you set up shop.

The colors and variations of your products. Everything.

Make sure you have a control to test against, and don’t test everything at once. You want to be able to see what actually moves the needle.

Figure out what people respond to and optimize that.

Side note: One thing I noticed that none of the performers had was the ability to accept credit/debit card. Why not have an iPad with a Square/Paypal card reader to accept tips? This would be one way of lowering the payment barrier and allowing people to tip, even if they didn’t have cash — which was the case with me.

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Those are the 3 steps of the Tip Jar Effect. If you can leverage them effectively, you can stand out in a crowded market and make 10x money compared to your competition — even if your product/service is pretty similar. Before you know it, people will be saying “Dayum! Take my money!”

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J Tan

Hey Dan it’s really cool how you can relate things that people usually wouldn’t think of connecting together. I know both entrepreneurship and street performing both still look for collecting money, but I think it’s your mindset that allows you to constantly make those connections and see how you can improve your own skills. On top of that, incidents like these make for much better articles since they are stories (of a sort anyway), which allows us as readers to relate more.

Sandra Crowe

Not bad at all. You could really use your skills in earning money and then turning that money into your next big thing. It would take a lot of time and effort, but I know if you are earning money the right way it would give you more happiness in what you achieve in the future.